Investor Fears Over Election Impact on Sterling

Tomorrows’ political election flags up uncertainty on the short term value of the pound sterling. With the closest election ever, investors are analysing prospective risk. Conservatives and the prospect of Brexit are weighed against the possible interventionist policies of Labour. Investors have pointed out a possible reduction in foreign M&A under a Labour and a fluctuation in the housing sector under the mansion tax. The tax may result in pushing property prices further down the market line to shoot up as those caught in the mansion tax begin to sell and buy cheaper properties, increasing demand.

Labour’s pledge to freeze rail fares may result in the transport stocks taking a hit but a move on these stocks is likely to be minor and not immediate. Ed Miliband’s talks of a freeze on energy prices will result in more investment pressure. The industry, struggling of late due to the lurch of higher bond yields. The fiscal policies of two of the major parties do not differ greatly. It is unlikely that Labour will succumb to pressures from the SNP so much so, that it would impact the UK bond markets.

It is difficult to predict the reactions of investors to both; increased Labour-led institutional investor bashing or proposed Conservative EU referendum.

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